TheBoldAge investigates: The cost-of-living crisis will potentially be much worse for social housing tenants

    TheBoldAge investigates: The cost-of-living crisis will potentially be much worse for social housing tenants

    By Frank Just. Published 2022-09-23

    BOLD-Living

    Now is the time for not-for-profit Housing Associations to live up to their philanthropic roots


    Do you know how many of your contracts have a clause in them that prices will increase by inflation + x%? Two examples that come to mind are BT (https://www.bt.com/tell-me-more) who increase by CPI + 3.9% and Social Housing tenancies which are provided mainly by Housing Associations who are limited to CPI + 1%. We have seen several estimates of inflation these last few months – Goldman Sachs at one point forecast a number of 22% for next year. Though with the proposed energy price cap they are now estimating a peak of 10.8% in October. You may have recently seen in the news that a proposal has been put forward by the UK Government to cap social housing rent increases to between 3% and 7% (https://www.gov.uk/government/news/rent-cap-on-social-housing-to-protect-millions-of-tenants-from-rising-cost-of-living). While this Is much lower than, say 10.8%+1%, it is still a worrying cap for many. What has fundamentally changed to increase rents even by 3-7%? For the moment, however, there is still no cap.As a social tenant you have no choice but to accept this rental increase or risk eviction; even worse if you’re a Shared Owner you could lose your share of the property and potentially be declared bankrupt. At TheBoldAge we have been researching shared ownership for some time and in our view, while its aims may have been laudable it's fast becoming a scandal in waiting, something we’ll pick up on soon. Returning to the social housing rent cap, nothing has yet been decided by the Government who, despite the unprecedented, jaw dropping cost of living Increases, are still in discussions with the Housing Associations on the proposal. Meaning that tenants who are already reeling, are potentially facing the prospect of another huge, uncapped Increase, and based on what justification?Housing Associations don’t talk about profit, they talk about “surplus”. As Shakespeare said though, “a rose by any other name”. In one London Housing Association, Notting Hill Genesis, they had a surplus in 2021 of £144.7m from a turnover of £909.1m. From rent and management fees they earnt £450m. That could deliver up to an additional £53m, just from the automatic annual CPI increase as an across-the-board contractual right and not just targeted at their social and shared ownership tenants.Interestingly the Housing Association trade body the National Housing Federation says the following on its website, "associations are not-for-profit social landlords that provide homes and support for around six million people all around England. Housing associations think that everyone should be able to live in a good quality home that they can afford. They are working together to make that happen. Housing associations have grown from philanthropic roots to provide quality affordable homes……... Housing associations invest any revenue they make back into the people and communities they serve."Taking a closer look at Notting Hill Genesis's financial statements one is struck by the fact that there are 43 employees earning over £100k, 3 of which earn over £240k. But don’t worry, that’s only 0.2% of their turnover according to their annual report; showing how statistics can be used to misdirect attention.Housing Associations claim that they are not-for-profit organisations and that they use the increases to “improve your home, support our planned investment in critical fire safety works, build much-needed affordable homes and invest in local communitiesSurely if community is meant to mean anything and Housing Associations want to live up to their philanthropic roots, they would stay any increase during a year which is already going to be financially difficult for some of the most vulnerable, their tenants.We’ll continue monitoring the situation and keep you updated of any changes as we see them. Let us know of any other areas you think are worth investigating for potentially profiteering on the back of the cost-of-living crisis.

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